3 Results That You Should Not Miss

During the short lunch break, 3 of KLCI member companies have released their quarterly earnings. Details as follow:

i) RHB 2Q14 EPS increased 33% to 21.90 sen. 1H14 cumulative EPS was up 28% to 39.50 sen. Its latest book value is RM6.97.

ii) AXIATA 2Q14 EPS fell 32% to 5.20 sen. 1H14 cumulative EPS was down 11% to 13.10 sen. Its latest book value is RM2.27. Dividend declared was 8.0 sen.

iii) TM 2Q14 EPS is flat at 5.97 sen. 1H14 cumulative EPS was down 1% to 11.86 sen. Its latest book value is RM2.03. Dividend declared was 9.5 sen.

The POSITIVES despite FIBON 9M14 EPS decline of 27% YoY

1. 9M14 EPS declined 27% YoY to 2.90 sen.
According to its announcement to Bursa, the decline was due to lower operating margin and higher admin expenses incurred. Zooming in, the sales to Indonesia has declined to RM0.5m from RM2.0m previously possibly due to slower growth experienced in Indonesia economy.

2. But there are three positives despite the earnings decline:
a. Super strong net cash of RM20.8m or 21.2 sen per share. This is an increase of 4% from RM20.0m as of end FY13.
b. Business Cash Flow generation remained healthy. Operating Cash Flow is RM2.3m, Capex RM0.4m, Financing Cash Flow RM1.2m. Meaning this Company business is still generating positive cash flow to shareholder.
c. Outlook for FY15 (Year End May) should be better. Although FY14 earnings likely to be lower, FY15 prospect is better. Remember FIBON secured the factoring business in Aug 2013 and is now in the gestation period to get the business running efficiently. After one year, the Company should perform better in FY15 as its factoring business improve.

3. VALUE OF FIBON is RM0.61. BUYING OPPORTUNITY if share price stay below RM0.50.
a. Assuming 8x PE to FY15 EPS of 5.0 sen, the Company business is valued at 40 sen. Add the net cash of 21.2 sen, the Company is worth 61 sen per share.
b. The 8.0x PE is conservative as it is significantly lower than Small Cap PE of 11x currently.
c. The 5.0 sen EPS is assuming Fibon can grow its business back to FY13 level of 5.0 sen EPS based on growth seen in its factoring business.
d. Overall, potential return is 24% but one must take a longer term view (6 to 12 months holding power) to wait for the potential of FIBON factoring business to grow.

Take profit on YOCB. Switch to TSH.

1. YOCB Spot On! On 18-July-2013, I highlighted that YOCB is worth RM1.00 and investors should watch out on this stock. At that time, YOCB share price was only 69.5 sen. Check my previous post here http://wallstreetklci.blogspot.com/2013/07/watch-yocb-worth-rm100.html

2. 44% gain in 7 months. After 7 months (today 18-Feb-2014), the share price has indeed hit RM1.00. As a result, my paper portfolio of 14,000 shares of YOCB has grown 44% to RM14000 (begin = 14000 * 0.695 = RM9730).

3. Time to take profit on YOCB. YOCB valuation is no longer attractive at RM1.00 as:
i) It is now trading at fair 7.9x PE. While this is slightly lower than consumer stock PE of 10x, its market cap is smaller.
ii) Dividend yield is now compressed to 3.5%. This is assuming the Company pay same net dividend of 3.5 sen like last year. Seriously, with the outlook of higher interest rate in the 2H14, you might as well put your money into Fixed Deposit.
iii) It is now 10% higher than its book value of RM0.90. So my previous argument of buying because it is below book value no longer hold.

4. Switching to TSH (can touch RM4.00 by end-2014). I am buying this stock before CPO prices break RM2700 per tonne. This stock need no introduction. It is in palm oil plantation business and has young trees and high volume growth in FFB. Again, I am looking for 30% gain in 1 year and I believe this stock can hit RM4.00 by end-2014.

5. 30% gain = 20% growth from FFB volume growth, 10% from CPO price. CPO prices last year is very low at about RM2400 per tonne. Just assume 10% growth in price will give around RM2640 and this is still below yesterday CPO price of RM2680.

6. My paper portfolio made 43% so far due to gain in YOCB, hope TSH can grow another 30% in 2014!

						Shares	Total Portfolio	Return
18/7/2013					10000
18/7/2013	Buy YOCB 10k shares	0.695	14000	9730	270	9730	10000
18/2/2014	Sell YOCB 10k shares	1.00	14000	14000	270	14000	14270	43%
18/2/2014	Buy TSH	3.00	4500	13500	770	13500	14270